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In March 1990, twenty months after the investigation was launched, the attorney general and the Society finally reached an agreement that closed the investigation. The attorney general required that the Society "prepare an annual balanced budget and report periodically to the Attorney General on the status of its budget for the balance of this fiscal year and for the following four years." The settlement also addressed the Society's endowment management practices of the 1980s, saving that "for many years, the New-York Historical Society expended portions of its endowment to pay for its operating expenses. The Society will now curtail that practice and focus more of its attention towards aggressive fundraising in the future."

Press release, Office of the Attorney General of the State of New York, Mar. 13, 1990.
Finally, the attorney general would monitor the manage­ment of the Society's collections, requiring the Society to notify the attorney general in advance of selling items from its collections.

Just eight months after accepting the permanent post as president and a little over a year after coming back to the Society to serve as interim director, Debs faced a critical situation, and she knew it. In an annual report written in December 1989, Debs outlined the severity of the situation: "On the one hand, unparalleled opportunity exists to realize at last the full potential of the Society and its great collections.. .. On the other, the long-ignored financial needs of the Society's col­lections, endowment and building,.. . coming together and requiring immediate and simultaneous solution, threaten the very existence of the institution." She ar­ticulated the challenge presented by the Society's new mission statement, which, she wrote, required nothing less than "institutional transformation." Although the new statement does not appear upon first reading to be radically different from the original, Debs noted that "in reality, ... it requires a profound change in emphasis. By stressing our role as an educational institution, it requires us to take an active, outreaching stance toward our public rather than merely accu­mulating material. ... It redefines the essence of the Society's being, and offers us the challenge and the opportunity of demonstrating that an institution founded by a small group of white gentlemen, long viewed as a bastion of privilege, . . . can remake itself into an open, expansive and inclusive actor of value and vital­ity in a heterogenous society."

To pursue such laudable goals is one thing; to pay for them is another. Debs continued:

There is simply not enough endowment to support the necessary staff and pro­grams. In addition, the opportunity to earn income through attendance and membership is severely limited. .. . Nor . . . does [the Society] receive public funding on an ongoing basis.. .. Other sources must be found to cover the op­erating shortfall, [and]the endowment must be restored and greatly increased. And in addition, the recently identified imperative and immediate needs of our landmark building must be met. We are, that is to say, required to raise large amounts of money annually simply to operate. We must raise even larger amounts for endowment to protect the institution for the future. And we must raise large amounts immediately to ensure that our building ... can adequately house and protect our collections. . . . Because basic needs have so long been neglected, nothing can wait.

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Source:  OpenStax, The new-york historical society: lessons from one nonprofit's long struggle for survival. OpenStax CNX. Mar 28, 2008 Download for free at http://cnx.org/content/col10518/1.1
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